$1.4T in states' pension fights foreshadowed in RI

Retired social worker Jim Gillis was told his $36,000 Rhode Island state pension would increase by $1,100 next year to keep up with inflation. But lawmakers suspended annual increases, leaving Gillis wondering how he'll pay medical bills and whether he'd been betrayed by his former employer.

"Any additional pension reform they try to do will be met with serious opposition," said Dave Low, of Californians for Retirement Security, which represents 1.5 million public workers. "Public employees have become the whipping boy."

Unions note that states have long neglected to contribute enough to pay for promised benefits. In 2010, 17 states set aside no new money for pension benefits. Kentucky hasn't made its share of pension contributions since 2004. In the past decade, Kansas and New Jersey haven't paid their full shares a single year, and Illinois has done so only once.

Steep pension fund investment losses made the situation far worse — a federal report says state and local pension plans lost $672 billion during fiscal years 2008 and 2009.

Longer-lived retirees, higher health care bills and pension increases also drive costs. In Rhode Island, 58 percent of retired teachers and 48 percent of state retirees receive more in their pensions than in their final years of work.

Before Rhode Island's reforms passed in November, its pension costs were set to jump from $319 million in 2011 to $765 million in 2015 and $1.3 billion in 2028. The state's annual budget is $7 billion.

Passing the changes wasn't easy. Public employees rallied at the Statehouse and jeered lawmakers during floor debate. Firefighters lined the walls of committee hearings. Rep. Donna Walsh called the vote the "most heart-wrenching, gut-wrenching vote" she'd cast in 12 years as a lawmaker.

One of the biggest changes involved putting off pension increases for five years, and then only if pension investments perform well.

North Providence retiree Jamie Reilly left her job as a secretary at age 50, thinking her 30 years of state employment would mean good benefits during her later years. But now she said she may be forced to re-enter the workforce at age 55 because the state has put off pension increases.

"I counted on that money," Reilly said of the increases, which she estimates would have started at $700 to $1,000 a year. "I retired knowing I was going to get a certain amount of money. You work all your life and you plan, and they take it away from you."

Cranston firefighter Dean Brockway said higher retirement ages mean he will have to work several years longer than he expected, and he wonders how he'll climb stairs in heavy gear in his 60s. Brockway, who has nearly 30 years on the job, said reducing benefits could make it harder to recruit public safety employees.

"Could I do something else? I don't know," he said. "A lot of us chose to dedicate our lives to public service because to us it's an honor. Could I be a carpenter? I don't think so. This is what I do."

State leaders, however, said they had no choice but to reduce benefits taxpayers cannot afford. Otherwise cities might have gone bankrupt and current workers would have no retirement security, Raimondo said.

"These problems won't go away," she said. "The longer you wait, the bigger the problems get. People looking for easy, short-term solutions. ... Well, there are none."